US Craft Beer Enters a New Phase (Craft Beer Week) | Rabobank

US Craft Beer Enters a New Phase (Craft Beer Week)

May 16, 2018

There is a battle between two competing trends in the US craft industry.

First is rapid growth in the number of breweries.  By the end of 2017, over 6,300 breweries were in operation in the US – and growth doesn’t have to end here.  The move to local beer and brewpubs could drive the number of breweries to 10,000 or more in 5 years.

Source: Brewers Association

The second is slowing craft beer growth.  After a decade of double-digit growth, we’ve had two straight years of 5% growth.  Even within that 5%, growth is dominated by smaller brewers.  In 2017, 60% of craft beer growth came from microbreweries (less 15,000 barrels of annual production) and brewpubs, according to the Brewers Association.


 Source: Brewers Association

Put these trends together and brewery closings are on the rise as well. 165 breweries closed last year, up from 97 closings in 2016. The biggest was Green Flash – a Top 40 brewer with national distribution that went bankrupt following aggressive expansion plans.

In this more crowded marketplace – brewers that seek a regional (dare we say national?) presence are finding it increasingly difficult to go it alone.  In our recent note – The Great Fragmentation of Beer – we examined the many forms of partnerships in the market today – from selling out to global brewers, taking on a private equity partners or forming an alliance with other craft brewers.

We expect this partnership trend to continue. Brewers will increasingly find it necessary to partner with companies that can help build out sales/distribution capability, provide capital for investment, access to raw materials, and opportunities to enter new markets.

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